Managed by

ProClass

Supporting the Drive for Cashable Savings

Local Government’s Procurement Classification

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The Business Challenges

• Need for local authorities year-on-year cashable savings (CSR 2007/financial settlements)

• Recognition that collaborative planning, working, sourcing and contracting is a significant source of new savings

• Giving people accurate, meaningful and reliable information to build business cases and make informed decisions….quickly

• Being able to compare information on a like-for-like basis

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The Problems

• Difficulty in getting access to reliable and accurate information quickly and being able to compare it with others

• Current information is coded/classified to different standards

• Financial coding not designed or readily accessible for market analysis and collaborative working

• Potential cost to change existing financial and operational systems

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The Vision

• Ability to use one common standard, owned by local government and reflecting its third-party expenditure profile

• Free of charge and easy to use, with training and advice on hand

• No change to existing coding and classification structures, including financial codes – simply cross-referenced to the common standard

• Easier access to good quality information which can be shared on a like-for-like basis with any local authority

• No changes to existing IT systems or need for expensive consultants to advise on implementation

Managed by

Procurement Classification

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Definition

“A classification structure logically groups similar things together into classes or families for the purpose of analysis. Hierarchical classifications allow analysis to be done at macro or micro levels, depending on business need.”

New Standards for Procurement Classification – Towards a Pan-London Strategy (May 2006)

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Classification is different from Coding

“Coding” means a reference that unambiguously identifies aspecific thing. Examples of such structures include UNSPSC, NSV, Thompson and CPV.

“Classification” means a reference that groups related things together for analysis

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Business Importance

“To be effective, collaboration and joint procurement needs full and reliable information about who is buying what, from whom, and through what means. This will entail using a common classification system”

Efficiency in Civil Government Procurement (1998) Report (ISBN 0947819592)

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Business Role

• Supports the standardisation of information recognising that everyone has different ways of coding and saving data

• Allows the like-for-like comparison of meaningful information, to identify new areas for collaborative working and business case development

• Supports the planning process including the analysis of high-value/high-risk expenditure

• Can provide an overarching framework for linking information derived disparate IT systems and/or coded using various schema

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ProClass - The Answer

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Background

• Owned and developed by local government and adopted by eight of the nine Regional Centres of Excellence in 2006, following two years of extensive research and testing

• Free to use and easy to understand• Designed to support collaborative working through the use

of Expenditure Analysis, Contracts Registers and some supplier portals

• Complements existing coding structures • Mapped to UNSPSC, Thompson and NSV• Dedicated website• Training and advice available• Managed by Coding International Ltd since October 2007

on behalf of the new Regional Improvement and Efficiency Partnerships (RIEPs)

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Management Arrangements

• CIL’s responsibilities include:– Maintaining integrity/approving changes– Maintaining and publishing mappings with existing

coding structures (e.g. UNSPSC)– Recommending national commissioning to RIEPs– Marketing ProClass to local authorities and relevant IT

suppliers– Providing training, guidance, case studies and

information to local government– Encouraging the adoption and embedding of ProClass

in local authorities– Managing and updating the ProClass website

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Introducing ProClass

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Design Attributes

• Granularity• Appropriate hierarchy

– Tiered or single level to suit the complexity or value of the purchase

• Balance – how many levels?– No more than three

• Extendable and easily maintained by the public sector• Cross-referenceable to other coding structures

– Including GL Chart of Accounts

• User-friendly– See immediately what it means. ProClass can be used by non

procurement specialists

• Descriptions not numbers – No more than 300 categories to pick from

• Search facility

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Reflects Our Expenditure Profile

• ProClass supports the targeting of high value expenditure– High value services and products are sub-divided into

lower levels (for example, construction, consultancy, social care and ICT) to provide detailed analysis

– Low value commodity items are classified to one level (e.g. stationery) – limited savings available

• Hierarchy is also based around service departments (e.g. Housing, Leisure and Social Care)

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Structure

• 30 classifications at level one• 174 classifications at level two• 23 of the level two classifications are taken to a

third level• 80 at level three• Current Version is C8.2 – available in Microsoft

Excel

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Hierarchy Example

Environmental Services

Asbestos Removal

Land Protection

Forensic & Laboratory

Technical Equipment

Funerals

Pest Control

Graffiti Removal

Street Cleansing

Laboratory Testing Measuring

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ProClass Does Not

• Classify supplier types, but what you buy from them

• Provide information on SMEs, BMEs and/or local suppliers

• Support Catalogue content and/or trade with the private sector

• Replace the need for financial coding (subjectives and objectives)